ADB’s Kuroda Urges Unlimited BOJ Easing Toward 2% Inflation

By Andy Sharp -
Jan 11, 2013

The Bank of Japan (8301) should conduct
unlimited easing until it achieves 2 percent inflation, Asian
Development Bank President Haruhiko Kuroda said.

“It’s very important to commit to a clear inflation
target,” Kuroda, a potential contender to succeed BOJ Governor
Masaaki Shirakawa when the latter’s term ends in April, said
today at a seminar in Tokyo. “The BOJ should make a commitment
like the Federal Reserve or European Central Bank and not limit
itself to easing in batches of tens of trillions of yen.”

The BOJ is set to adopt the 2 percent inflation target
advocated by Prime Minister Shinzo Abe without setting a
deadline for achieving it, according to people familiar with
officials’ discussions. The yen has fallen around 10 percent
since mid-November as Abe has called for more aggressive
monetary measures to end deflation.

Kazumasa Iwata, a former BOJ deputy governor who is also a
potential contender to replace Shirakawa, said at the same
seminar today that central bank’s target “should have a degree
of flexibility.”

The yen was at 88.92 per dollar as of 5:29 p.m. in Tokyo
after touching the weakest level since June 2010.

Iwata, president of the Japan Center for Economic Research,
said an equilibrium level would be around 95 yen, while Kuroda,
a former vice finance minister, said the yen was “slightly
overvalued.”

Iwata and Kuroda are contenders to replace Shirakawa,
according to Koichi Hamada, an economic adviser to Abe, and Mari Iwashita, Tokyo-based bond strategist at SMBC Nikko Securities
Inc. Chief Cabinet Secretary Yoshihide Suga said Jan. 9 that the
next BOJ chief should see the need for bold easing.

The BOJ expanded its asset-purchase program for the third
time in four months in December, increasing it to 76 trillion
yen ($854 billion) from 66 trillion yen.